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State lawmakers outraged by Anthem Blue Cross' rate hikes

Robin Hindery | The Associated Press

The Anthem Blue Cross headquarters is seen after the health insurer began informing its individual policyholders of rate hikes up to 39 percent to take effect at the beginning of March, on February 9, 2010 in Woodland Hills, California. David McNew/Getty Images

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SACRAMENTO — California lawmakers grilled Anthem Blue Cross executives on Tuesday about their plan to boost individual insurance premiums by as much as 39 percent, only to hear them blame the economy and a broken health care system.

"Have you no shame?" he asked Anthem president Leslie Margolin at a special hearing.

Margolin said she was disappointed by the question. She said she understood and regretted the burden that rate increases place on California customers and offered to work with state lawmakers on health care reform.

"I will do anything I can do to take costs out of the system," Margolin said. "My suggestion is we do that through partnership."

Committee members asked what the insurer had done internally to cut costs and how much its top 10 executives received in compensation last year. Anthem executives said they could not provide specific figures.

Laurel Kaufer, a single, working mother from Woodland Hills, said she received a letter from the company last month saying her premium could go up by about 34 percent, from $823 a month to $1,102 a month.

Over the past 10 years, she said, her premium has risen 550 percent.

"Because of these relentless rate hikes and out-of-pocket costs, I measure the need for each visit to the doctor, especially for myself," she said in an interview before the hearing, where she testified alongside several consumer advocates.

The Assembly Health Committee opened the hearing at the state Capitol to examine the premium proposal by California's largest for-profit health insurer amid a heated national debate over health care reform.

The hearing was held one day before a congressional committee is scheduled to question Anthem's parent company, WellPoint Inc.

California lawmakers said they were astonished by Anthem's attempt to boost individual insurance premiums at a time when policyholders are struggling to afford health coverage.

The increase is scheduled to take effect May 1 and would affect roughly 700,000 individual policyholders in the state.

Committee members showed rare bipartisan unity in their criticism of Anthem, with both Republicans and Democrats calling the company to task. Republicans expressed concern that the hikes would hit the middle class especially hard.

Jones, who is running for state insurance commissioner, said the state has a responsibility to protect California consumers and businesses from "outrageous" rate increases.

"How are Californians supposed to afford health insurance with these rate increases?" Jones asked while opening the hearing. "What level of profit is enough?"

Company executives said Anthem needs to increase premiums in part because younger, healthier people have been dropping health insurance coverage during the recession, leaving it with a pool of policyholders that is older and more dependent on health care services.

Anthem vice president and general manager James Oatman said Anthem had lost about 25,000 customers from its individual coverage pool in 2009.

Margolin said premium hikes are an unfortunate byproduct of the current economic climate and flawed national health care system.

"We are trying to exercise our role and our responsibility to identify and implement bold solutions to address and stem rising health care costs," Margolin said. "None of us can keep doing what we've been doing."

The latest increase would average 25 percent but could be as high as 39 percent for some customers who purchase individual policies.

Anthem officials have said the remaining 7.3 million customers in California are covered by employer-sponsored plans and would not be affected.

The Obama administration has referenced Anthem's rate proposal frequently in its arguments for health care reform.

On Wednesday, a U.S. House of Representatives committee will question WellPoint executives about proposed premium hikes in California, Maine and elsewhere.